UA braces for budget cuts

  • University of Alaska President Jim Johnson is preparing for big cuts with a capital "B." (AP Photo/Michael Penn/Juneau Empire)

University of Alaska President Jim Johnsen is preparing for the worst when Gov. Michael J. Dunleavy releases his budget plan Feb. 13.

While budget specifics were not discussed, Johnsen said after several discussions with Dunleavy and his Budget Director Donna Arduin that he expects the university’s proposed budget cut to be “big.”

I would say it’s going to be a capital ‘B’ big,” Johnsen said during a Feb. 8 meeting with the Journal and the Anchorage Daily News.

Dunleavy, Arduin and other administration officials have spent much of their first two-plus months in office preparing Alaskans for what their budget will look like without roughly $1.6 billion.

They are committed to balancing the state’s budget — currently with an anticipated 2020 fiscal year deficit of about $1.6 billion — without tax hikes or changing the Permanent Fund dividend calculation, which were two pillars of Dunleavy’s campaign.

Johnsen expects the state universities to be one of the areas that will take the brunt of the budget cuts because the university system is the state’s third- or fourth-largest budget item, depending on whether one lumps PFD payments with other state spending.

“It’s going to be K-12, health and us to get to $1.6 (billion in cuts),” he said.

The University of Alaska System is also one of the easiest places lawmakers to cut spending. Despite having three separate universities and 13 community campuses under its umbrella, the university system’s general fund budget support comes in one lump sum and it is up to Johnsen and the UA Board of Regents to allocate funding and implement the cuts.

The state’s university funding also is not tied to any other statutory mandates — outside of the constitutional mandate to have a university — or funding formulas that would need to be changed to make cuts legal or workable within the Capitol.

Whatever cuts Dunleavy proposes to the UA budget will come on top of significant cuts already. The state’s general fund support for its university system has fallen from $378 million in fiscal 2014 to $327 million currently. University funding bottomed out at $317 million in 2018 but last spring legislators agreed to add $10 million back in; at the time former Gov. Bill Walker was proposing flat funding but agreed to the one-time increase.

Johnsen considers the budget cuts to total $195 million in overall forgone state support since 2014, which doesn’t account for inflation since then.

Unrestricted state money accounts for roughly 40 percent of the total UA budget. The rest of the system’s funding comes from federal sources, tuition and student fees and other sources such as research grants.

“For us, even the word, even the news of a significant budget cut has negative implications for us. It has negative enrollment implications, which takes away our ability to serve our mission for the state,” Johnsen said. “With enrollment comes tuition.”

To that end, enrollment has fallen along with the budget in recent years. The total student headcount across the system was down 15 percent from fall 2013 to fall 2017, according to university figures.

The university system has cut its workforce by 1,283 over the past four years and statewide administration has been cut by 38 percent over that time, according to Johnsen.

Much of that was done under Johnsen’s multi-year “Strategic Pathways” initiative to reform the system’s operations and focus on strengthening the programs and other things it does best.

He characterizes the state funding as the “seed corn” that allows the university system to carry out its multiple missions.

“We’ve already taken $195 million in cumulative cuts but if this year-over-year cut is big then it’s, to quote Donna Arduin, ‘it’s doing less with less,’” Johnsen said. “Then it’s saying, really seriously folks, this campus, this college, this school, this service, this team — sorry, it’s going to need to go away.”

He and the regents will do everything the can to avoid closing branch campuses that are often in remote parts of the state, but the concept of using them as “nodes” where students use content developed at the main campuses through distance learning has been discussed, Johnsen added.

He has avoided talk about eliminating specific programs to avoid unnecessary worry among students as well as potentially deterring future students from enrolling.

However, he now says, “if indeed the sky is falling I am going to yell and I’m going to say, this is what athletics costs; this is what KUAC (UAF public radio) costs; this is what Mat-Su College costs; this is on down the list and talk about it.”

What cuts come will not be pro-rated among the three main campuses; they will be evaluated at a statewide level, Johnsen emphasized.

One thing administrators will prioritize is the system’s research budget, which is weighted to Arctic research at UAF. Fairbanks is generally recognized as the world’s leading Arctic research institution.

UAF’s Geophysical Institute has also served as primary testing ground for the Federal Aviation Administration’s work to integrate small, unmanned aircraft into the national airspace and allow the private sector to realize the advantages of the new and evolving technology. The drone work at UAF has also helped attract business startups in that realm to Alaska.

UA leaders often stress that state research support returns $6 to Alaska for every $1 invested.

“If you have a revenue generator like that, that actually adds to your international reputation and the quality of what happens in your classrooms and your labs you’re going to try to reduce the impact there,” Johnsen said of research funding.

While the expected magnitude of Dunleavy’s proposed cuts have many across the state waiting anxiously for the release of the budget — and many others waiting eagerly — legislators will also have their say as to what future state spending will look like.

In conversations with legislators Johnsen said there are naturally those who are opposed to the governor’s plan. Others, even some who he characterized as “fiscal hawks,” are skeptical that the administration can find another $1.6 billion to cut from a budget that has already been reduced about 40 percent from its peak.

Others exude “resignation,” Johnsen said, given Alaska’s governor has the authority to line item veto appropriations. That authority could mean that Dunleavy vetoes appropriations back to his proposed level regardless of what the Legislature does.

Dunleavy has said he wants to work with the Legislature to rebuild the state’s budget.

A final group of lawmakers is resigned for a different reason, according to Johnsen.

“Maybe the average citizen in Alaska needs to experience what likely would come from a $1.6 billion cut to get it, to understand — maybe it’s too big a role — but to understand the very important role that government plays in Alaska’s economy,” he described. “so that was interesting to hear.”

Dunleavy and Arduin discussed possibilities for supporting the university with Johnsen through fulfilling its land grant entitlement or tying funding to performance outcomes, the latter of which California did when Arduin worked there.

He is supportive of those concepts, but they are very long-term, Johnsen said.

He did note that legislators and administration officials don’t seem to be holding the UAA School of Education accreditation issues against the system overall.

“There were serious issues there; the leadership issues have been addressed; the curricular issues are being addressed,” Johnsen said of UAA losing its initial education licensing accreditation. “The primary concern right now is taking care of those students and making sure each and every one of them has a path to licensure from an approved program.”

UAA’s advanced and specialized education licensing programs, such as those for a principal license or special education certification have not been impacted, he added.

Whether or not UAA will go through the multi-year process of reapplying for its lost accreditation is unclear at this point. Administrators are still gathering information to answer that question.

If the decision is ultimately not to reapply, undergraduate education students at UAA could get degrees through UAF or UAS from Anchorage in much the same way the system runs its nursing school.

“If you’re sitting in a nursing class in Fairbanks, the faculty member and the students are UAA students, the same in Juneau; so nursing education is done across the state by UAA, so we know how to do this,” Johnsen described.

Regardless of what the answer is to that question, it would undoubtedly be made more difficult by another significant budget cut.

Johnsen acknowledged his frustration regarding what he sees as a “culture of complacency” in Alaska and a corresponding feeling of entitlement, which other prominent leaders in the state have expressed recently as well.

“It is frustrating there’s no doubt about it when the dominant thinking in the state is ‘me, now’ as opposed to ‘us, later,’ which is sort of our business, right?” he said in reference to Dunleavy’s pledge to pay $1.9 billion in PFDs while cutting $1.6 billion elsewhere. “We’re in the business of preparing people to create the future of our state.”

Still, he said the university will ramp up marketing for its college savings fund around PFD time next fall.

And when the politics and bureaucracy and other challenges of his job start to strain his nerves, Johnsen goes back to the root of the issue.

“When I get sort of to the end of my rope I’ll ask my assistant to get me into a class somewhere here at UAA, or UAS or a rural campus or up in Fairbanks and then you get why we’re here,” he described. “Or you meet with some researchers and they start talking about what they’re doing with drones or with sea ice or with you name it; and you just go ‘Wow, this is cool stuff. This is exciting; we need to keep fighting for this.’”

Elwood Brehmer can be reached at [email protected].

02/14/2019 - 2:20pm